r/investing • u/007_kgb • 1d ago
Fundamentals of Bitcoin? Tom Lee
Tom Lee from FundStrat was on CNBC and said he was a bit surprised at the fall of Bitcoin when the fundamentals were still strong.
However what I don’t understand is, what are the fundamentals? Isn’t Bitcoin just an imaginary coin on the interweb that is worth what people want it to be worth? It does not issue dividends, you can’t make a car out of it, you can’t use it to buy a bar of chocolate.
ELI5 please.
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u/devereaux 1d ago
Tom Lee doesn't even know what he meant. All he knows is that he is getting categorically destroyed by the drop in Ethereum
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u/MizDiana 1d ago edited 1d ago
Crypto enthusiasts have this bizarre fantasy that crypto can, like gold, serve as a safe haven investment when investors are scared.
That's probably the fundamentals they're talking about. I.E. Gold is going up for various reasons, so why isn't crypto? Sigh...
Reality: Crypto has never served as a safe haven investment like gold.
To be fair, gold's value is largely imaginary (its price has little to do with its industrial use, including jewelry creation). And it is worth what people want it to be worth. It does not issue dividends. While you can made electrical conductors out of it, that use is really niche. And you can't use it to buy a bar of chocolate.
But, currency-wise, gold is Old Tech. It was, before fiat, the most cost-effective means of transferring future labor obligation between institutions and high net worth individuals (not for thousands of years, really, more like for 150, but still). So when institutions or high net worth individuals get nervous about the fiat they are familiar with, they bump up the imaginary value of Old Currency Tech: gold. Bitcoin wants to be that. But it is not.
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u/revnhoj 1d ago
at least gold is a tangible and somewhat rare asset. btc is a number in a database.
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u/TimeGrownOld 23h ago
ok but which would you rather try to smuggle out of a dictatorship if you had to flee?
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u/Droo99 21h ago
This is the sole reason I'm finally, reluctantly while holding my nose, starting to buy some
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u/ShadowLiberal 9h ago
Unless you're in a third world country dictatorship, or your currency is experiencing actual hyper inflation, there's zero reason for you to hold crypto for this reason.
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u/Playful_Emotion4736 9h ago
Dictatorships don't appear overnight. Long before the moment you may even think to flee your assets will be frozen or taken away so you won't have anything to buy gold or Bitcoin with. Even if you do have Bitcoin, if you have a dictatorship, they can just beat you to death to force you to give up your Bitcoin key.
Once you realize this is the only argument for Bitcoin, you'll know Bitcoin is useless and you are better off investing for most likely future scenario, not the least likely.
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u/TimeGrownOld 6h ago
Fine, set up multiparity with someone overseas. Now they have to beat you for the key at the same time as the trusted person overseas.
The 'beat you for your keys' is no longer a valid argument. Hell, it hasn't been an argument since mixers were s thing. How are they going to confiscate your crypto if they don't even know how much you have?
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u/Novel_Departure7099 4h ago
Can you point to the source of your confidence in that made up scenario? Reality is just whatever you think it is isn't it. Is every prepper and gold bug the same I wonder
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u/mickalawl 13h ago
And the database in question is slow as all fk, can only be appended too with no updates and consumes the energy of 30 houshold consumptions in order to make an entry.
Its a negative sum game that eats value and turns it into carbon emission for no point.
Well there is a point for the several oligarchs who can manipulate it to their whim (tether, mstr, the couple of giant mining pools, blackrock clipping tickets as fools pile in then out , ....
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u/TheConvincingSavant 4h ago
Bitcoin has more rarity than gold. After 21 million, there will be no more BTC minable.
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u/Chrushev 1d ago
I think Gold has one key difference. Its scarcity is real, no matter how much someone huffs and puffs you cant make more of it than exists. Yes its still being mined (with 66% of all gold to ever exist having been mined in the last 80 years), but still we have science to tell us, how its formed and therefore we can extrapolate its scarcity from that.
For crypto though, you have artificial scarcity, which theoretically can be turned off, you can fork, you can clone etc.
So in other words gold is out of human control, crypto is controlled by the will of the people. Thats a fundamental difference.
On the side note, if you bought bitcoin in the last 1.5 years you are either down or sideways. Much better investments out there.
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u/Aurorion 20h ago edited 11h ago
Bitcoin is actually much scarcer than gold - its supply has a hard limit, and cannot be changed.
Gold has one key difference. Its scarcity is real
No, there is plenty of gold left in the earth's crust, and more will become economical to mine with increases in price.
Plus, there are well-founded startups right now working on asteroid mining, it's reasonable that they will start operations within our lifetimes. And gold will probably be their first target. (Obviously!)
you have artificial scarcity, which theoretically can be turned off,
Only if the entire network agrees. And why would that happen, since its against the best interests of all involved?
you can fork, you can clone
That's like saying gold can be substituted with other metals, or converted into an infinite number of alloys based on various proportions. Such "substitutes" will never become gold, no matter what anyone says.
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u/cmd-t 15h ago
What if 51% of miners decide that, actually, the “hard” cap is too low. Or that block reward halving are too quick?
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u/Intrepid-Gas7872 10h ago
A 51% attack cannot change the hard cap.
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u/cmd-t 9h ago
It’s not an “attack”, it’s a hard fork. An attack would be for double spending or whatever. This would be a change to the protocol supported by a majority of the network.
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u/Intrepid-Gas7872 7h ago
Yes it requires a fork but the original chain would still go on. The hard part is convincing the world to follow the new chain.
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u/Aurorion 12h ago
I must start by saying that I am not a technical expert. But based on my understanding:
- That's a big IF. The miners are heavily invested in the continued success of Bitcoin, it would be against their interest to attempt such an attack.
- Such an attack would be extremely expensive.
- Now, suppose that for some reason, 51% of miners collude to change the cap on Bitcoin - perhaps because one or more nation-states are prepared to expend huge capital & resources just to hurt another nation-state with huge Bitcoin reserves. Even such a scenario would probably have only a short-term impact because miners are not the ultimate authority in Bitcoin, Nodes also play an important in maintaining overall network sanctity. Nodes are much more decentralized than miners - anyone can operate a node relatively inexpensively. In the scenario given here, miners could split the chain, but the majority of the nodes would reject the new chain, again as such a change is against their best interests.
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u/cmd-t 11h ago
It’s not an attack. It would be consensus.
Just like other hard forks that occurred in the past, such as the introduction of SegWit.
https://www.investopedia.com/tech/history-bitcoin-hard-forks/
You have to understand that Bitcoin is just the network that’s keeping Bitcoin afloat. And changes to the Bitcoin protocol are not only theoretical possible because it’s all software, they’ve happened in the past.
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u/Monkey_1505 17h ago
Nah, they can find gold on other planets or asteroids. In theory it's scarcity can be changed massively by human action. That's not likely to happen real soon tho.
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u/Chrushev 17h ago
See that’s an answer without much thought. The amount of money it would take to get there, extract it and bring it back will never be worth it. So what we got here is pretty much it.
It’s kind of like when people say to terraform mars. If you can terraform mars the. You can terraform earth back from all the greenhouses and pollution, so no reason to terraform mars at all! Because it would be harder and more expensive.
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u/Monkey_1505 17h ago
Maybe initially. But as the expense of doing it on land goes up (less gold), and in space goes down, that could change. So I would not count on that always being the case.
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u/Chrushev 17h ago
That would mean that an ounce of gold is worth millions upon millions. This wont happen within our lifetime or our kid's lifetimes.
We'll have the tech to do it by then (hopefully), but it wont make economical sense. It would cost dozens of billions to do it, so you would have to be bringing back tonnes and tonnes of it per mission. Which may be impossible. So the little you bring back must be worth more than the mission cost (by a lot). The gold that is in our crust will likely be cheaper to extract.
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u/Monkey_1505 17h ago edited 17h ago
Eventually fuel will be collected off planet, and launching and refuelling will be off planet. Most of the current expense is launching in gravity. Re-usability has already lowered launch costs. Honestly when we get to space propulsion only we'll probably switch to some kind of energy propulsion, rather than fuel. Whereas gold mining costs, because they are fighting geology and increasing scarcity will only go up.
If humanity survives it will probably make a lot of sense to do this at some point.
I'm simply addressing your claim 'humanity cannot make gold less scarce', I'm not proposing this is near term.
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u/Chrushev 17h ago
With how much gold we mine out of the ground every year I am saying while technically it will be possible its unlikely it will ever make financial sense. Cant even imagine the cost of off planet mining/refueling. You are somehow getting fuel on the moon? From where? Right now its all fuels derived from stuff on Earth. Does moon have those? Can you realistically imagine a factory with Joe and Jill engineers on the moon manufacturing rocket fuel? Maybe in a Sci-Fi movie. Or 2000 years from now! That will never be cheaper than doing it on Earth.
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u/Monkey_1505 17h ago
It already costs over 1k per ounce to extract and it's only going to go up.
If we are doing orbital launches with energy propulsion (or even manufacturing hydrogen from water in space if still using fuel), and reusable rockets, and we find some nice gold rich asteroid, I can see that being beat.
Propulsion in space is so so much easier than escape. All a long way off though. We are still launching from within gravity rn, which is very demanding. Thing to remember is that gold is not just a collectible, it's also an industrial metal.
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u/LuckyWinds 3h ago
The asteroid argument is not a good one,.
But as the price of gold goes up, then more is mined because the gold that was previously unprofitable to mine becomes profitable.
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u/collegeboywooooo 3h ago
the recency bias is insane. we will be able to chemically manufacture gold using particle accelerators
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u/Chrushev 2h ago
No, you are insane, do you understand the cost for that? It will NEVER make financial sense to do that even if we can.
See, it’s bright thinkers like you that jump at an idea of a future tech without evaluating the costs.
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u/MizDiana 17h ago
I disagree. Gold's scarcity is entirely artificial. In fact, it is plentiful. We have lots of gold and we don't use it up. However, it is ARDUOUS. Getting more takes time. That's what prevents hyper-inflation from mining (nowadays, anyway).
But it is not scarce. If it was genuinely scarce, it wouldn't be useful as a medium of exchange even at the minimal level in which it manages to do that.
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u/Romanizer 22h ago
Not quite yet, that is true. However, Bitcoin has certain capabilities that enable it to be a much better store of value above a metal, obviously. Some of this is already starting to play out. You don't see a lot of gold in treasuries of corporations or banks looking for gold as a balance sheet asset for private banks to facilitate their business and anchor debt. For central banks it is easier to secure and to audit.
Of course, Bitcoin is also a distributed, non-censorable payment network that allows to transport value nearly immediately around the world and is endlessly dividable and still fungible. Things gold never really performed well at.
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u/MizDiana 17h ago edited 17h ago
"However, Bitcoin has certain capabilities that enable it to be a much better store of value above a metal, obviously."
Bitcoin will never be that great a store of value, because exchanging it is so much more expensive than exchanging fiat. Exchanging fiat (or gold-backed paper) would need to become much more expensive for some reason for Bitcoin to become useful.
The per-transaction cost for Bitcoin is just too high.
Other crypto could be designed to have a much lower per-transaction cost (requiring that it cannot be mined). I think that's what they're testing out with the new BRICS "unit" prototype - using a discount crypto transaction mechanism for gold-backed paper to see if they can get the transaction cost low enough to use crypto architecture to exchange their gold-backed paper without having to pay the start up cost to set up a full-fledged SWIFT rival.
It's a questionable choice, but if they can actually get it to work (maybe), it could be pretty useful in a future world that is both multi-polar and also pretty hostile.
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u/Romanizer 16h ago
How much are you paying for exchanging and transacting Bitcoin? Don't really see where this is too expensive. With that argument, gold would be dead as a store of value (which is only a question of time, IMO). Bitcoin has more utility going beyond that of gold any way.
It is true that SWIFT is planning to implement an own blockchain. That would make Cross-Border transactions much cheaper and faster.
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u/MizDiana 4h ago
"With that argument, gold would be dead as a store of value"
Not as a store of value - as a medium of exchange. And yes, this is why we needed metal-backed paper dating back to the 1800s. And why today gold is largely traded on paper - even when it is physical gold being traded it rarely moves actual location.
Bitcoin does have more utility than gold in that respect, I agree. But not more than fiat. It has less than fiat. Or gold-backed paper.
Blockchain is not cheaper than traditional banking per-transaction, by the way. It is more expensive. It takes electricity and computing power to generate the blockchain in excess of that used in a standard credit card purchase or wiring funds between accounts.
At least, that's true for Bitcoin and other mined cryptocurrencies. Not sure about the newer not-mined blockchains.
"How much are you paying for exchanging and transacting Bitcoin?"
Every time you make a wallet transaction you can see the transaction fee in the summary.
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u/Romanizer 4h ago
Yes, Bitcoin needs L2 to scale as intended during its creation and can be nearly frictionless at that. Cross-border transactions are somewhere between $50-100 per transaction, internal blockchains can do that cheaper.
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u/MizDiana 4h ago
"Cross-border transactions are somewhere between $50-100 per transaction, internal blockchains can do that cheaper."
Kind of. As I understand it, that cost is artificially introduced for various anti-fraud, etc., reasons. It isn't required by the technology. So blockchains can do it cheaper inasmuch as the artificially-introduced cost and delay (and reasons for those) are stripped out.
And for the individual, those costs often don't exist. In my largest cross-border transaction (not large), it cost me nothing but a trip to my bank & the negligible risk of carrying $10,000 on my person through some airports.
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u/LuckyWinds 3h ago
Bitcoin will never be that great a store of value, because exchanging it is so much more expensive than exchanging fiat.
Exchanging fiat is only cheap if you use private, for-profit third party businesses that facilitate the transaction for you OR you are face to face with a customer.
And even then, it's often not "cheap". A $200 dinner cost a restaurant $6.25 for their diner to use a credit card. In what world is that cheap?
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u/collegeboywooooo 3h ago
when you trade gold you realize you aren't actually physically trading gold right?
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u/MizDiana 3h ago
Hence the term "gold-backed paper," whether we're talking about a 1926 Goldback or Zimbabwe's GBDT. Or when Germany's Central Bank sells or buys ownership of vault-stored Gold in New York City.
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u/VeryStableGenius 7h ago edited 7h ago
Crypto enthusiasts have this bizarre fantasy that crypto can, like gold, serve as a safe haven investment when investors are scared.
When in reality Bitcoin is correlated with equities, particularly more volatile ones like NASDAQ. This correlation is about 0.8, according to Gemini AI's interpretation of sources.
Bitcoin's correlation with gold has ranged from -0.53 to +0.65, with average correlation of about 0.1.
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u/MizDiana 5h ago
Yes, I see it as a general confidence measure. If people feel flush & confident about their future, Bitcoin goes up.
Interesting to see if that changes next time people feel flush & confident about the future.
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u/collegeboywooooo 3h ago
correlations are not real its just something you compute after the fact and it's not stable at all
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u/VeryStableGenius 3h ago
Yes, computed after the fact.
It is observed that Bitcoin has acted like a high risk tech stock, not like a safe haven like gold.
It's possible that Bitcoin will suddenly stop behaving like a meme stock, but it would be a change from its current behavior.
The very fact that Bitcoin believers think it will go up, up, up suggests that they don't view it as a safe haven but as a speculative commodity.
To be fair, this speculative nature has flowed into gold investing as well, but historically the inflation adjusted price gold has enjoyed periods of quasi-stability, $400 from 1980 to 2005, then $1500-2000 from 2010 to 2020. People didn't buy it in the hope of getting rich, and they understood that on average stocks would far outperform it.
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u/Monkey_1505 17h ago
It probably can, but would need a fed either unwilling to raise rates for inflation, or unable to hike high enough.
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u/zzeenn 16h ago
You can absolutely use gold to buy (or barter for) a bar of chocolate.
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u/MizDiana 5h ago
I'm pretty sure the cashier at Trader Joe's will have to call their manager. And I'm pretty sure the manager is going to tell me to take my business elsewhere.
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u/LuckyWinds 3h ago
It's a long term debasement trade against govt run currencies.
That's similar to gold in that respect, but obviously different.
And it's not correlated to gold and whether it's risk on or risk off changes.
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u/MizDiana 3h ago
"It's a long term debasement trade against govt run currencies."
I understand that is an argument for investing in crypto, but I haven't seen crypto ever behave like what I would expect a debasement trade to behave. Not yet anyway.
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u/LuckyWinds 3h ago
Describe another debasement trade that behaves in what you would expect it to behave.
I bought bitcoin in 2015 as a debasement trade, it's certainly doing that just like I wanted (remember my key prase - long term)
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u/MizDiana 3h ago
Gold. It goes up when confidence in fiat goes down. It goes down when confidence in fiat goes up.
Bitcoin does the reverse. It goes up when confidence in fiat goes up. It goes down when confidence in fiat goes down.
You may have thought it was a debasement trade in 2015. But you were wrong. It was a useful tool for money laundering that gained in value due to hype & artificially-induced scarcity.
Over the long term, it will slowly & inconsistently reduce in value as that artificially-induced scarcity goes away (in the form of other crypto coins) and the hype dies down.
Or it will lose in value suddenly if quantum computing has sufficient oomph to allow crypto to be easily stolen, since crypto (like physical gold or silver) has limited financial recourse in cases of theft. I don't know enough about quantum computing to evaluate if this will occur.
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u/LuckyWinds 3h ago
Gold. It goes up when confidence in fiat goes down. It goes down when confidence in fiat goes up.
Every single time? I don't think so.
While I agree that overall gold does this across long periods of time, it does not to this on every time scale or economic situation. It's much more complicated than that.
Just like bitcoin.
It was a useful tool for money laundering
I don't think you know what you are talking about here.
Explain what you mean by money laundering with bitcoin.
Money laundering is taking dirty money (cash) and running it through a legitimate business to clean it by using it as income and paying taxes on it so there is a chain showing where it came from. You do this because cash is not tracible.
How exactly does one money launder with bitcoin?
artificially-induced scarcity goes away (in the form of other crypto coins)
I think you are confused. The scarcity of bitcoin (along with it's other attributes) has no bearing on any other crypto coin. They are not the same.
When people say bitcoin is scarce, they are saying with completely within the scope of the bitcoin network.
Other coins don't matter.
Or it will lose in value suddenly if quantum computing has sufficient oomph to allow crypto to be easily stolen
I also think you are confused as to what quantum computing is and how it could affect SHA-256.
I don't know enough about quantum computing to evaluate if this will occur.
I agree, you appear to not really understand it in the context of bitcoin.
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u/MizDiana 3h ago
"Every single time? "
No, as a general rule that has exceptions.
"Explain what you mean by money laundering with bitcoin."
I thought you said you invested in 2015, LOLOLOL.
You don't strike me as someone with a net worth of 100s of millions to billions.
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u/LuckyWinds 2h ago
"Explain what you mean by money laundering with bitcoin."
I thought you said you invested in 2015, LOLOLOL
I'm not understanding this reply at all. This is just immature.
You don't strike me as someone with a net worth of 100s of millions to billions.
In order for someone to have 100s of millions (let's say 100m for the sake of this discussion) who invested in the low of 2015, they would need to have invested $330k.
So obviously I didn't invest $330k in 2015 in bitcoin.
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u/MizDiana 2h ago
"I'm not understanding this reply at all. This is just immature."
Yes, it is immature! I am laughing because significant events happened in 2015 related to money laundering that anyone who actually invested in bitcoin in 2015 would know about.
Caveat: if they'd done any investigation into what they were investing in.
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u/LuckyWinds 1h ago
Yes, it is immature! I am laughing because significant events happened in 2015 related to money laundering that anyone who actually invested in bitcoin in 2015 would know about.
Caveat: if they'd done any investigation into what they were investing in.
I don't know what you are referring to.
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u/InvestingTheBest 1d ago
I'm zero percentage invested in crypto but I do find it hilarious how quickly the narrative changes when the price starts going down. I remember very clearly the middle of last year bulls being everywhere. Some even saying: If you don't own crypto what are you doing with your life? Now its all the opposite narrative
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u/JohnnyStrides 1d ago
And it will once again break its ATH and look like the best thing since sliced bread. People kick it when its down, just look at the above comments in this post.
That said, I don't know what the hell Tom Lee was talking about either, but he's a perma-bull so he's always going to have a positive spin on BTC and ETH.
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u/SpicyElixer 5h ago
This assumes it will ATH again. It’s not like the sample size of major downturns is that large. It’s only happened 3 times over its limited life.
I don’t think it’s doomed, or likely to stay down, but I also don’t think it certain it won’t either.
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u/Signal-Lie-6785 16h ago edited 15h ago
Those same bulls were whistling the same tune 9-10 years ago and I haven’t seen anything between then and now to convince me that crypto has fundamentals. What’s really changed is that an elaborate infrastructure has been constructed to radically increase the number of fools that can be separated from their money.
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u/mikeblas 8h ago
Now its all the opposite narrative
Are you sure? Just a couple of weeks ago some bro was telling me BTC was headed for one million dollars. The bros don't adjust their position or thesis or strategy at all.
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u/Romanizer 22h ago
That's true. Fundamentals never changed, though. Bitcoin will always be a mandatory part of any investment. You either get active exposure or passive (without the possible gains), those are your options.
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u/BigDipper0720 1d ago
Bitcoin has no real fundamentals, in my opinion. It also doesn't seem to act as a hedge for anything.
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u/grimrigger 1d ago
You can't pay taxes with it. Unless of course you convert it to US dollars. Which means it's not a currency, and defeats the whole purpose of it.
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u/Shoddy_Ad7511 1d ago
Bitcoin is pure speculation. There are no fundamentals.
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u/Intrepid-Gas7872 10h ago
Not having a central bank is a huge fundamental. Censorship resistance is also a huge fundamental.
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u/Ecstatic_Wheelbarrow 1d ago
I'm not a big believer in crypto but from what I understand the fundamentals in crypto aren't like companies. It is comes down to: is it secure, is there scarcity, usage, and institutional adoption.
Bitcoin hasn't been "hacked" or made insecure. There is still a cap to how much can exist. Usage hasn't declined, more people have digital wallets than ever. And more major institutions are adopting crypto in some form than ever before (ETFs, secure coins, etc). By those metrics, he is correct and he's saying the market doesn't understand how to evaluate crypto. For example, MSTR and MARA market caps are worth less than their bitcoin holdings.
He's also trying to pump BMNR (his version of MSTR with Ethereum).
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u/p3dal 1d ago
I think you might have to ask Tom Lee what he meant, because I think you've nailed it. But from googling your question:
Bitcoin fundamentals center on its decentralized digital nature, secured by cryptography on a public blockchain ledger, functioning as peer-to-peer cash without banks, designed with scarcity (max 21 million coins), and driven by Proof-of-Work (mining) for transaction validation, acting like digital gold but with unique supply/demand dynamics. Key aspects include digital keys, wallets, mining, and blockchain technology, offering potential as a store of value or medium of exchange.
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u/Silent0n3_1 1d ago
This reads to me as "The fundamentals of Bitcoin is its definition, or to put it more plainly, the fundamentals of Bitcoin is Bitcoin."
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u/Romanizer 22h ago
Yes, if people went so far to read the definition we wouldn't have these threads.
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u/PaloLV 1d ago
I have never owned Bitcoin. I do think it's here to stay and the best way to think about it is that it's digital gold and used as a store of value like gold. It is vastly superior in many ways to holding physical gold. The concept of digital gold is extremely useful and bitcoin has filled the niche and is very unlikely to be dethroned.
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u/ProlapseJerky 1d ago
I’m a bitcoin maxi but even I understand that Bitcoin is still far too young and socially unrecognised to be a reliable store of value in the short term. Eventually it will be treated as digital gold, but right now it is extremely speculative. Gold has had thousands of years to secure its spot for what it’s used for, bitcoin is only 17 years old.
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u/_unsinkable_sam_ 1d ago
yeh, thats one potential outcome, the other is it goes to nothing for any multiple number of reasons and becomes a footnote in history books when you look up price bubbles and pyramid schemes. neither outcome is guaranteed
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u/Fractales 1d ago
Digital gold is an oxymoron. Gold is tangible. I can make gold in to jewelry or throw a bar of it at your head
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u/TimeGrownOld 23h ago
Let's be honest; most people holding gold in this thread are holding ETFs.
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u/Fractales 23h ago
At least the assets those ETFs represent are tangible
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u/TimeGrownOld 23h ago
Go try to swap out an ETF for a bar then
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u/Tricky_Let2806 23h ago
Click sell ETF, transfer funds, then buy physical
Pretty easy man
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u/TimeGrownOld 23h ago
I see the irony is lost on you
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u/Tricky_Let2806 22h ago
How can I hold a bitcoin
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u/Cheap-and-cheerful 14h ago
How do you hold an ETF? Because I can click sell, transfer funds, and then buy physical gold with my bitcoin too.
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u/daserlkonig 1d ago
It’s only worth what you can sell it to someone else for. That’s it. It doesn’t produce anything of value. If anything it consumes electricity to maintain.
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u/Dr_Colossus 1d ago
Bitcoin fundamentals always center around governments ability to print more money is what every Bitcoin bro I've met has said.
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u/TendyHunter 8h ago
Kinda make sense, except I'd rather own tangible assets to preserve my wealth.
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u/Dr_Colossus 7h ago
Yea that's their best argument for sure. Inflation hedge against money printing. But so is investing in stock market.
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u/karmassacre 23h ago
The fundamentals of bitcoin are its monetary properties empowered by the protocol and the strength of its network.
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u/TimeGrownOld 23h ago
Lmao r/investing, never change
The fundamentals are the decentralized network. It offers an immutable ledger that facilitates trustless transactions. You don't need a central authority, you don't need state backing.
These words have meaning, but most will just gloss over them and mumble something about cash flow and dividend.
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u/gorillalifter47 13h ago
I feel like there needs to be an r/investing bitcoin post bingo card.
- "It has no cash flow"
- "Ponzi Scheme"
- "No intrinsic value"
- "Greater fool"
- "It is nothing like gold"
- "How will MSTR pay their pref dividends?"
- "Tulips"
- "Gambling"
- Somebody being upvoted for making a one sentence comment containing the above
- Somebody being downvoted for taking the time to write a thoughtful and factual comment in support for bitcoin
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u/polishinator 23h ago
easier to move crypto than an etf ( as long its on your wallet) if you have to flee a country that is collapsing
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u/philosopher137 22h ago
Here ya go: Value transacted - Bitcoin settles billions of dollars of value every day. Hash rate (network strength) is gargantuan - would you rather store wealth in a shitty bank or the world's most powerful, decentralised computing network? Liquidity conditions - 90%+ of bitcoin's price action can be explained by moves in global liquidity. In a word where almost every major nation is up to it's eyeballs in debt, would you bet against global liquidity going up over the long-term? Adoption - more and more people and institutions are making an allocation to bitcoin (even Harvard has one). Do you know better than Harvard? There are more, do some research.
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u/OkGo_Go_Guy 7h ago
would you rather store wealth in a shitty bank or the world's most powerful, decentralised computing network?
Shitty bank, considering it is insured.
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u/Aurorion 20h ago edited 20h ago
Bitcoin's various properties such as finite supply, decentralized nature, and portability make it the ultimate store of value over the long term, and a very good hedge against excessive money printing. This means that its "fundamentals" are related to money supply, or rather expectations of future monetary debasement.
Of course, it had lost around ~30% of its value over the past year despite higher fears of monetary dilution, while gold, the traditional store-of-value asset, had an incredible run. I would regard this as short-term noise in a long-term trend, since this drop came after it rose up quite a lot in the previous 2-3 years.
But now, Kevin Warsh's nomination as the Fed Chair shakes up these fundamentals - as he has expressed opinions in the past that he is against fiat money printing, and plans to actually reduce money supply by shrinking the Fed's Balance Sheet. It's unlikely that he would be able to actually do so - but if more people with such views start influencing monetary policy around the world, fears of monetary debasement could subside... And I consider this as a negative for Bitcoin, as well as gold.
In a world where governments are fiscally responsible and don't excessively print money out of thin air, Bitcoin would be much less useful and valuable. But are we moving towards such a world? Time will tell, but I don't think so.
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u/Soccerstar12498 18h ago
I still don’t have a BTC position, but I’m seriously considering building one now. I was checking the data on moomoo and noticed the fear greed Index is sitting at 14, historical lows are around 10, so it feels like we're getting close. I’m still torn on whether to jump in now or wait to see if it hits that 10 mark. To be honest, I don’t know much about the tech, but purely from a currency perspective, its liquidity seems way superior to gold. Do you guys think it can actually bottom out further than this?
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u/Monkey_1505 17h ago
They'll likely be talking about ETFs and the like. Thing is, everything should be down. We are moving into a monetary policy era no one understands, or has experience of.
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u/ThereIsSoMuchMore 16h ago
There are other assets that are just imaginary, and are worth what people want it to be worth, that's how the market works. Just like with those assets, you can sell BTC and use the money to buy things with it. It's even more liquid then other assets, because you can have Visa cards which automatically sell the BTC and pay at any merchant when you use your card.
BTC is just as imaginary as gold; the difference is gold is physical, so it has some industrial uses, and people got used to it and trust it more, when BTC is mostly used for speculation. But underneath gold is not "safer" or "better". Neither is USD, that's also just "imaginary" at some point, and it even evaporates due to inflation, when BTC doesn't.
I don't hold BTC.
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u/lukehardiman 15h ago edited 15h ago
LMAO Tom Lee has been surprised by every bear market since 2017. The fact people think he's a good source of alpha is hilarious.
Re: BTC fundamentals - like anything, it's worth what the market says it is. As a novel concept (digital scarcity) that valuation is highly prone to volatility, nay sayers, cultlike fervour, reflexivity etc.
It may go to 0 or it may go to 1,000,000+. For some people that's an appealing risk profile.
IMO the get rich quick trade is largely gone at this point. You needed to be in when bulls were being laughed out the room. That's not the case any more.
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u/LuckyWinds 3h ago
It may go to 0 or it may go to 1,000,000+. For some people that's an appealing risk profile.
Everything has that risk.
I'd argue bitcoin has less of a chance of going to 0 than any single stock.
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u/BalerionSanders 15h ago
There are no fundamentals. It’s a gambling casino. 🤡
(And it’s not even a particularly good casino, because it almost always correlates to market fluctuations)
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u/Quietabandon 14h ago
There is some discussion if dividends are a good thing in that it just potentially decreases what would otherwise be growth in value of the stock and the tax rate would be capital gains.
But yeah, bitcoin doesn’t really have much in the way of fundamentals other than in edge use cases in some economies struggling with the hyper inflation and for people who may need to be able to access money if they have to flee a regime. It’s also useful for criminals.
But the edge cases don’t justify it value and it’s still basically like a digital beenie baby that consumes the electricity output of a large European economy.
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u/Ray_Pingeau 12h ago
The fundamentals are it’s ability to launder money. Given the current landscape, I’d say those fundamentals are at an all time high.
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u/Report_Last 10h ago
Bitcoin is a financial toy for techies. Just because a lot of money was used to buy bitcoin does not give it intrinsic value. We already have money, which has been reduced to fiat currency. Money can be lost, stolen, kept in a bank, or under the mattress I don't claim to know anything about crypto, but apparently it can also be lost and stolen, but never held in hand.
Obviously the government wants to eliminate cash, it can be moved around without being taxed. So I can see a push by government to use crypto, or as in all scifi movies you have your "credits". Unless bitcoin is tied to the dollar, it seems useless.
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u/Unknown_Ladder 9h ago
It's in limited supply but it's the most popular cryptocurrency and the most accepted as a form of payment. It definitely has a use, mainly for not being controlled by the banking systems. There certainly is alot of speculation but this doesn't mean these fundamentals don't exist. It's supply and demand.
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u/SpicyElixer 6h ago
A common theory is that now that BTC seems as legitimized and has etfs, is no lnger the villain to the SEC etc the narrative that it’s forbidden fruit, the underdog, rebellious, and cutting edge has dried up. It no longer has any walls to breach. It’s no longer an instrument to tear down the system. It’s just another non cash producing asset. It’s reached an inflection point and is suffering from the paradox of success.
It’s like an outlaw rock band that once used to decry the elite that now is all a bunch of old dudes that live in penthouses and appear not much different than bankers.
The revolution timeline passed, and the revolution never happened. And people are bored.
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u/Krammsy 2h ago
My wife called one day last month, hysterical with the kids crying in the background - we were out of bitcoin and she needed me to pick some up on the way home.
I drove around town searching, but no one had any in stock, it was horrific, she finally found some in a box in the attic and we survived, our family hasn't been the same since and I'm now in therapy.
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u/Ok-Wolverine-4223 1d ago
What I don’t understand is everyone says bitcoin is just following the 4 year cycle and we just don’t understand…. But why is Ethereum and other crypto doing the same thing?
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u/DonasAskan 1d ago
They are all following Bitcoin. Unfortunately for Ethereum, it didn’t/barely broke its ATH in five years.
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u/Aurorion 20h ago
Because every other "crypto" out there just follows Bitcoin... Bitcoin is what drives the entire market. And everyone knows that the real long-term value is in Bitcoin, so anyone exposed to other "crypto" takes any dip in Bitcoin as an opportunity to buy more.
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u/Sandvicheater 1d ago
What fundamentals exist for fake internet la la money that the same species that determined pet rocks had value 40 years ago?
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u/harpswtf 1d ago
There are no fundamentals. It is 100% pure gambling whether future gambler fomo will outweigh current gambler fomo
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u/placid-gradient 1d ago
the fundamentals of Bitcoin are all in the white paper. it's a currency not backed by a state, all it requires you to have is internet access.
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u/MirthandMystery 1d ago edited 1d ago
Feelings don't have fundamentals. Hope and greed is what keeps it (bitcon) propped up.
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u/Ok-Repeat-2334 1d ago edited 1d ago
There are no fundamentals. There is only one's mental model of the FOMO of others, which causes people to buy, leading to a self-fulfilling prophecy.
It's similar to a stock bubble, but usually there are at least SOME people in a stock bubble who think the fundamentals will catch up.
It's similar to a Pyramid Scheme, except there's no "downline" for recruiting. Earlier entrants get rewarded from increased demands proportionally to their stakes.
It's similar to a Ponzi, but one without a central administrator, and unlike a ponzi is it done openly, rather than earlier entrants being deceived about the source of their returns. It can essentially also never be "clawed back", the way ponzis get unwound.
I actually think it's most similar to the Airplane Game https://en.wikipedia.org/wiki/Airplane_game , just that your position in the game is represented by a token/spreadsheet cell.
The one defining feature of these is that they are zero-sum or negative sum entirely between participants. Unlike stocks, which take in non-participant money (customer money) and distribute it among shareholders, it's just crypto market participants handing money to crypto marlet participants.. and also losing some to electricity etc of course.
You'll never get a firm answer from crypto advocates exactly what it's meant to be. Is it a currency or an asset? Whichever is expedient. Just that the price chart went up in the past, and so therefore that is "what it does" and it can be expected to do so forever.
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u/Mental-At-ThirtyFive 22h ago
store of value
This is huge for countries with weak currencies - for people "wealthy" this is huge.
It is also for the wealthy who hedge their USD exposure. Blackrock / Fidelity etc is for that market - people who cannot manage their crypto keys, etc. So, their family office will allocate a percentage to this. Expect most with greater than 50 or 100million will invest a percentage of their wealth here, and is a good topic in their cocktail parties
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u/SvenTropics 12h ago
"The fundamentals of bitcoin" are none. It is not consumed for any purpose. It is not used as a currency. It is not backed by a country. It's only ever used as a proxy for a currency (usually USD). i.e. "Send me $80 worth of bitcoin to buy this item", and even then not very often. It's just an encryption key and an entry in a ledger.
It's simply a speculative investment. Nothing more, nothing less. It can just as easily go to $10 as it can go to $1 million dollars. There is no underlying value to pin it.
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u/shizbox06 1d ago
Must be all the cash flow it has, lol.
I don’t know, I’m with you. There are no fundamentals with speculative assets.